Demand management to meet India and China’s huge water needs

A fight breaks out as student Vikas Dagar jostles with dozens of men, women and children to fill buckets from a truck that brings water twice a week to the village of Jharoda Kalan on the outskirts of New Delhi.

Wei River

Several thousand kilometres away, in central China, power-plant worker Zhou Jie stands on the mostly dry bed of the Wei River, remembering when he used to fish there before pollution made the catch inedible. Dagar and Zhou show the daily struggle with tainted or inadequate water in India and China, a growing shortage that the World Bank says will hamper growth in the world’s fastest-growing economies.

It also pits water-intensive businesses such as Intel’s China unit and the bottling plants of Coca-Cola against growing urban use and the 1.6 billion Chinese and Indians who rely on farming for a living.

“Water will become the next big power, not only in China but the whole world,” said Li Haifeng, the vice-president at sewage-treatment company Beijing Enterprises Water. “Wars may start over the scarcity of water.”

Water demand in the next two decades will double in India to 1.5 trillion cubic metres and rise 32 percent in China to 818 billion cubic metres, according to the 2030 Water Resources Group, a research collaboration between the World Bank, management consulting firm McKinsey & Company and industrial water users such as Coca-Cola.

That would produce returns of about 12 percent from investments in companies that treat or process water, said Arnaud Bisschop, who oversees $3.2 billion (R24bn) investments in the Water Fund run by a unit of Pictet & Cie in Geneva.

The World Bank estimates that 1.2 billion people in India, where farmers use 80 percent of available water, will exhaust their fresh water supplies by 2050 at the current rate.

For Dagar, and the 200 other villagers in Jharoda Kalan, that shortage is already a daily fact of life. “This is for our drinking and cooking,” he said, pointing to four bucketfuls he won from the fight. “I’ve been waiting for the past hour.”

South-west China had its worst drought in a century this year, prompting Premier Wen Jiabao to say that the country would face a test to meet its grain output target.

India’s farmers are awaiting the start of the rainy season this month after the weakest monsoon in more than three decades last year cut rice output by as much as 10 percent, according to the agriculture ministry.

China, with 20 percent of the world’s population and 7 percent of its fresh water, has contaminated 70 percent of its rivers and lakes, while half the cities have polluted groundwater, according to the World Bank. By 2030 China will have a supply shortfall of 201 billion cubic metres unless the government takes steps to control demand, McKinsey partner Martin Joerss in Beijing wrote in an April report.

The pollution and shrinking rivers are partly a result of China’s rapid industrialisation and growth.

“China can solve this problem in a way that creates economic value as opposed to economic cost,” said Joerss. “There is tremendous, though largely untapped, opportunity to meet China’s enormous need for water resources by focusing on better managing demand.”
Investments in technologies to ease China’s water deficit are expected to reap 165131bn (R11bn) in profit a year, according to the McKinsey report.

Asian water-related companies had benefited from the demand for treatment and supply and have potential for further gains, said Bisschop. He said profit on water investments in China may be about 8 percent to 12 percent a year, with even higher returns in some cities.

Intel said it had expanded its transparency and disclosure on water use and adopted a new water policy as part of the California-based company’s commitment to responsible water management. Intel spokeswoman Susan Qian declined to comment on the company’s water use in China.